The Australian Government is committed to supporting the research activities of the higher education sector. A key area of concern amongst stakeholders is the lack of available evidence relating to the quantification of the full (direct and indirect) cost of research in Australian universities. An understanding of the issues associated with the full cost of university research is vital to ensure that universities can perform research of the highest quality on a financially sustainable basis.
The Department of Innovation, Industry, Science and Research has initiated analytical work to examine issues associated with the full cost of university research.
2008 Study
In 2008, the Department engaged the services of the Allen Consulting Group to undertake an initial study to examine the full costs associated with research in universities. Final versions of these Issues and Discussion papers prepared by the Allen Consulting Group are available below.
2009 Study
Given the outcomes of this analysis and in light of the recommendations made by the reviews of the National Innovation System and Australian Higher Education, the Department re-engaged the Allen Consulting Group to carry out further analysis.
This project commenced in February 2009 with the following aims:
- The identification of the scale and nature of the indirect cost associated with university research in Australia and the method by which individual universities are meeting these costs.
- The preparation of a definitive list of the indirect costs associated with university research.
- An extensive literature review of indirect cost categories, accounting practices in international universities and the costs incurred in these countries in determining indirect costs.
- The preparation of indicative costing of a composite model for funding the indirect costs associated with university research.
- Identification of the drivers, benefits and obstacles in implementing a funding regime which fully meets the indirect costs associated with university research.
To achieve these aims, the study took account of a wide range of factors, including the financial circumstances of individual universities and individual university approaches to meeting the indirect costs of their research activities. The study considered different research disciplines examined built on international experience with respect to meeting the indirect costs of university research.
Input to the study was provided by a Project Steering Committee and a Technical Working Group to support the project.
The study has now been completed. The final report can be accessed below.
Draft papers and other additional material developed by the Allen Consulting Group as part of the project can be accessed here
Project Steering Committee
Membership of the Steering Committee included stakeholders from Universities Australia, the Commonwealth Scientific and Industrial Research Organisation, Innovative Research Universities Australia, the Australian Technology Network of Universities, the Group of Eight, non-aligned universities, the National Tertiary Education Union and nominees from the Department of Finance and Deregulation, the Department of Prime Minister and Cabinet, the Department of Treasury, the Department of Innovation, Industry, Science and Research and the Allen Consulting Group.
Terms of Reference
The Working Group membership comprises the Deputy Vice-Chancellors and financial officers from universities, personnel from the Department of Finance and Deregulation, the Allen Consulting Group and the Department of Innovation, Industry, Science and Research.
The project Steering Committee will:
- Ratify the Terms of Reference for the project.
- Assist the contractor during the course of the project in obtaining data
- Provide oversight of both the project and delivery of the final report.
- Provide advice prior to the beginning of the project on:
- emerging issues and sensitivities
- project methodology
- data availability
- relationships relevant to the project
- project deliverables
- Receive input from the Technical Working Group, as required
- Assist with the drafting of the final report
Technical Working Group
The Working Group membership comprised Deputy Vice-Chancellors and financial officers from universities, personnel from the Department of Finance and Deregulation, the Allen Consulting Group and the Department of Innovation, Industry, Science and Research.
Terms of Reference
The technical Working Group will:
- Convene as required
- Report to the Chair of the Project Steering Committee
- Provide expert advice to the Allen Consulting Group and the Project Steering Committee on:
- The appropriate use of university data
- University business models and accounting and reporting systems
- Activity and project based costing and attrition methods
- Provide input into the development of a costing spreadsheet for university data and associated questionnaire
- Assist with the development of a definitive list of indirect research costs for the sector and the process for measuring them.
Additional Material
As part of the study the Allen Consulting Group developed a draft guidance paper* outlining some of the key elements required to support and indirect cost framework, including a potential set of indirect cost categories and cost drivers that might be utilised to attribute an appropriate share of indirect costs incurred by Australian universities to Australian Competitive Grant funded research projects.
Some of the Allen Consulting Group's observations in relation to international approaches to addressing indirect costs are outlined in the presentation below. International perspectives have also been referred to in the draft guidance paper.
*The observations and views expressed in the final report, draft guidance paper are those of the Allen Consulting Group and do not necessarily reflect the views of the Department of Innovation, Industry, Science and Research.